Biggest change in pay for 30 years
New redundancy rules set to become reality in coal mining
Wednesday 23 August 2017
The Federal Court has this week endorsed a decision made by the Fair Work Commission in January that will see redundancy payouts for miners capped at 30 weeks.
For more than 30 years, miners made redundant in the coal sector were entitled to 1 weeks severance pay and two weeks redundancy pay for every year of employment.
So under the old rules, for a lifelong employee at Peak Downs mine earning average mining wages, redundancy and severance at the end of their 30-year career could be 90 weeks of normal pay and worth more than $250,000.
For that reason, these scenarios were often referred to as the “golden handshake” in mining circles.
However, in what was the biggest change to the Black Coal Industry Award since at least the 1980’s, a full Bench of the FWC decided in January that redundancy payments will be paid at the rate of two weeks a year, for no longer than 15 years. The severance payment of one week per year remained unchanged.
The issue was contested in the FWC, because the Coal Mining Industry Employer Group (CMIEG) had wanted a cap of nine years, arguing that the existing uncapped redundancy was out of sync with other comparable awards and way too generous.
“The CMIEG submitted, based on the evidence, that there was no reason to suggest that the experience of those retrenched in the black coal mining industry was any different from the experience of employees made redundant in other industries,” the FWC wrote.
“CMIEG also pointed out that black coal mining industry workers receive benefits additional to those available in other industries, including portable long service leave and the payment of untaken personal leave.”
Union and professional employee representatives, on the other hand, argued that the redundancy schedule should not change.
They argued that coal mining was characterised by peaks and troughs, profits per employee were very high during boom periods, coal mining companies could afford it, and retrenched employees - if re-employed at all - were likely to be re-employed on inferior conditions.
To support their claims, the CFMEU quoted from a survey they commissioned from Professor David Peetz from Griffith University, who surveyed more than 2000 coal workers.
According to the survey results, less than half of those retrenched were currently working in the coal mining industry, only 21% of those who had been retrenched are in full-time work, and of those who are in paid work, 72% are worse off than they were before retrenchment.
While technically the CMIEG didn’t get what it was asking for, the compromise decision by the FWC represents a huge reduction in employer liabilities for any future downturns like those we have seen in the last five years.
The Association of Professional Engineers, Scientists and Managers Australia, along with the CFMEU and the Automotive Union were the applicants in the Federal Court case..
The new rules will not apply to anyone with 15 years or more of service and if an employee is offered work on the same pay and conditions elsewhere, the employer remains exempt from paying the redundancy.